Wednesday, May 1, 2013

Closed Short Citigroup Call Position

As discussed here CCI has a long position in the financial sector etf (xlf) via the Jan 15 $10 Call, that has usually been hedged via a shorter duration short call in Citigroup (C).
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Citigroup fell over 3% over the last few days, and CCI took advantage of this gyration to close the covered call position.  This resulted in a very modest .5% gain in about two weeks.  Of course it would take much longer to generate that return in cash or bonds.

 Since the position was established on Jan. 8 the approximate performance numbers are
  • 8.9% - simply holding xlf
  • 20.4% - holding the Jan $15 Leap (due to the increased risk/reward of the leverage)
  • 19.1% - the combined long/short position described here
Good returns with lower risk ...hmmm.
Obviously there is plenty of time left on the position (Jan 15) anything can still happen. 
CCI will look to re-establish a short position in Citgroup calls if/when the market gyrates upwards.  
Stay tuned.

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